The already complex negotiations linking the state's liquor business, hospital debt and more than $100 million in voter-approved bonds just got more complicated. Democrats in Augusta want to link the expansion of Medicaid for low-income Mainers to the final deal. But Republicans are balking, and the parties are now on a collision course, with both sides vowing not to give in. A.J. Higgins has more.

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Maine Battle over Hospital Debt, Medicaid Expansio

Duration:4:3

From the Democratic perspective, rolling the federally-funded expansion of Medicaid into a bill that repays Maine's hospitals for years of long-standing Medicaid debt only makes sense.

But not to House Republican Leader Ken Fredette of Newport, who says the majority party's new demand potentially jeopardizes a huge influx of revenue into the state's economy.

"Democrats are stopping us from being able to put $700 million out into the economy," Fredette says.

The Democratic proposal pivots on provisions of the federal Affordable Care Act that would extend health care coverage to tens of thousands of Mainers, paid by the feds at 100 percent for the first three years, ramping down to 90 percent beginning in 2020.

And a study by the Kaiser Family Foundation's Commission on Medicaid and the Uninsured shows Maine could actually end up spending fewer state funds on Medicaid if it joins other states in taking part in the expansion.

Fredette says he and other Republicans want to have a discussion on Medicaid expansion, but they don't want to do it until Gov. Paul LePage has exhausted his options in negotiations with the U.S. Department of Health and Human Services.

"I think what we're really looking at at this point in time is having the governor - the chief executive - negotiate the best deal possible," Fredette says. "He's asked, in terms of Medicaid expansion, for 10 years at 100 percent. Now, I don't believe that it's appropriate for the Legislature to try to go in now and undercut the work that he's trying to do. And so, while we may be looking at a short-term solution, I think the governor's looking at the long-term interest. And what we want to do is support the governor in terms of negotiating the best deal for Maine taxpayers."

But Democrats say it's time to do business. "We can't leave this offer on the table - it's a good deal for Maine and we should move forward with it," says Democratic House Speaker Mark Eves.

Eves says Republicans and Democrats already agree on most of the moving parts that comprise the deal that links repayment of nearly a half-billion dollars of Medicaid debt owed to Maine's hospitals with future revenues derived from a new, negotiated contract for managing state liquor sales. And they support LePage's plan to obtain a revenue bond to pay Maine's share of the hospital debt.

For his part, LePage has linked repaying the hospitals with the release of $105 million in voter-approved bonds for highway improvements and other infrastructure upgrades.

The Democrats reason that Medicaid costs are what's driving the deal in the first place, so why not include Medicaid expansion as a tool to control those costs going forward, as other states are? Justin Alfond is the Democratic president of the Maine Senate.

"There's over 20 states across this country that are accepting federal funds," Alfond says. "They are trying to get the best deal for their state. They're looking at the same numbers, and they're all making decisions that make sense economically for their state, morally for their state. And they realize that if they don't address health care costs in their states too, they'll be in the same position that we are."

One of the uncertainties about Medciaid expansion has been removed: Alfond said confirmation from U.S. Secretary of Health and Human Services Kathleen Sebelius confirmed that Maine would not be penalized for previously coveraing low-income adults, and will receive full funding from the federal government for 10,500 Mainers in that category.

Alfond said the federal approval should help convince some Republicans who are wary of the costs associated with Medicaid expansion. "Today is a good day for the state of Maine because one of the biggest obstacles that the governor and the Republicans Party has had about accepting federal funds was this last piece of information," Alfond says.

But Republican Health and Human Services Committee member Rep. Richard Malaby, of Hancock, says he's still not ready to sign off on the federal approval, which also contains a request from the Center for Medicaid Services for an actuarial study of Medicaid costs.

Meanwhile, the Lepage administration says it is receiving mixed signals from Washington on whether an actuarial study is needed or not.